“An investment in knowledge always pays the best interest.”
― Benjamin Franklin
In my younger and more vulnerable years my father gave me some advice that I’ve been turning over in my mind ever since.* “The way to riches,” he said, “ is by swiping those little ketchup and mustard packets from fast food restaurants.”
I have written a number of times about the technical aspects of managing money, especially as one moves into retirement. That’s where I am and it’s on my mind. But there is another aspect that is as important as the technical ones: that is the psychological piece. The story you tell yourself about your relationship to money may be even more important than how much of it you have or how you invest it. And if you have a partner or a family with whom you are financially involved or with whom you share resources, differences in the stories you tell yourselves and about each other can have a profound effect on that relationship, even potentially contributing to the end of said relationship.
Recently I have been listening to a podcast called, I Will Teach You to be Rich hosted by Ramit Sethi. In spite of how it sounds, it has nothing in common with a late-night infomercial offering to sell you a course on how to make millions marketing stuff in your own Amazon store. In each 40 minute episode, Sethi interviews a couple that is having issues (that is, arguments) around money. By interviewing each partner and asking thoughtful questions, Sethi reveals the person’s money story, which usually goes back to their early childhood demonstrating that often, as our financial circumstances change as we move through adulthood, many times the stories remain static. The husband who grew up wealthy and can’t adjust to his new situation in which the family income isn’t enough to pay the bills. The wife who grew up poor and doesn’t want to take a vacation even though the family now has an income in the high six figures and significant assets in the bank.
Although my wife and I have always been on very close to the same page regarding saving and spending, the show has gotten me to think more carefully about my own habits and behaviors and how I sometimes (often) can be a cheapskate with myself, when the denial has no meaningful benefit to my financial well-being. Here are some examples of this type of behavior. (Note: I am not admitting to any of these.)
Driving an extra mile or two to save a few cents per gallon on gasoline
Not getting the best available seats at a concert when you can afford the better seats
Buying the inferior cheese, wine, whisky, olive oil, or coffee even though the cost of enjoying the best at home is nominal compared to enjoying the same or even lesser in a restaurant.
Giving only $36 to a cause you care about when you could easily afford $360
I am not talking about a license to waste resources or, heaven forbid, shopping therapy. This is about deciding what is important, what you care about, and finding a way to make it happen. It is about being generous with yourself, which is actually a precursor to being generous with others.
Many years ago, I was waiting for my wife outside the Woodley Park Metro Station after work in the early evening. I no longer remember where we were going. Maybe we were meeting friends for dinner or going to a party. There was a man playing the saxophone outside the station. He was playing jazz and he was staggeringly good. I was waiting about 20 minutes which is a long time to listen to a street musician and I really enjoyed it. I usually give money to buskers. I think the world is a brighter place with live music on the street and in subways and I like to support them. Normally, I would give whatever fistful of change I dug up from my pocket. Maybe a dollar.
On this particular day, the idea entered my head that I wanted to give this man $20. I wanted him to know that someone had given him $20 and I didn’t want him to know it was me. A $20 bill would serve the first requirement since no one asks a busker for change. To fulfill the second, I rolled up the bill in my hand so the denomination couldn’t be seen and surreptitiously dropped it into his case. My motivation was that I wanted to give this man something for the pleasure he had given me while I was waiting. I wanted him to know that someone had enjoyed his music so much they had given him $20. But then something else happened. For the first time in my life, I had this strange sense that I was rich. Surely, a person who can afford to give someone on the street $20 is wealthy, no? I had $20 in disposable income and the luxury of just being able to give it away. I don’t want to overplay this, but that little gesture had a pretty profound impact on the money story I told myself.
My point here is not to impress you with my generosity toward street musicians. In fact, I don’t think I have ever given a busker $20 since that time. Rather my point is that being generous, especially randomly and spontaneously, changes how you think about yourself and your relationship to money.
We have all heard the story of the elderly man or woman who lived frugally or even extremely modestly but left a fortune of millions of dollars to a lucky charity with whom the donor had had no relationship with during his or her lifetime. Or even of such a person who died without heirs or a will and so became a benefactor of the state.
There is much to be said for leaving something behind for your family or for a worthy nonprofit organization but not at the cost of missing some experiences you would have enjoyed or added to journey as a human being. Malcom Forbes is reputed to have said that those who say that money can’t buy happiness are shopping in the wrong places. I tend to disagree with Mr. Forbes. Money itself won’t make you happy regardless of where you shop. And yes, many struggle to pay the rent or buy food, and for them a higher level of income can be stress-relieving. But once the basic necessities are met, the important things are time with family and friends and experiences that are enriching like learning or being outdoors (at least for me). Money can be useful by making it possible to buy a plane ticket to visit the kids or to bring them to you or allowing you to take a trip with family or friends, and social connection is a big part of the happiness equation.
A rich life can be a long novel not only about wants but also haves and contentment. Generosity with yourself and those closest to you is an important first chapter.
*Yes, this is the first line of The Great Gatsby. It became public domain this year so there!